Thursday, May 21, 2015

Unions directly linked to strong economy, middle class

A new report from the Canadian Centre for Policy Alternatives has found unionization drastically affects a persons' ability to improve their financial position as well as their ability to withstand periods of economic recession. A new report from the Canadian Centre for Policy Alternatives has found unionization drastically affects a persons' ability to improve their financial position as well as their ability to withstand periods of economic recession.

"I'm committed to growing the middle class and giving every Canadian a real and fair chance to succeed." - Justin Trudeau, leader of the Liberal Party of Canada
“I believe the most important economic asset Canada has is the middle class.” - Thomas Mulcair, leader of the New Democratic Party
"One party and one party alone stands for middle-class Canadians and seniors, and that is this party." - Stephen Harper, leader of the Conservative Party
The middle class will be on the lips of politicians of all stripes in the coming weeks and months. Talking points will be uttered about why this plan or that plan is the best to help middle class Canadians and their families navigate the financial reality in front of them.
If it all sounds familiar, it's due to the fact this happens every four years when either a provincial or federal election rolls around. No matter the big issues of the day, it all bleeds back to promises of helping the middle class.
Those promises, however, have rarely come to fruition. The middle class has slowly been shrinking in the past few decades while income inequality - the extent to which income is distributed in an uneven manner amongst a population - has increased during the same time period.
The middle class is being hollowed out and this is connected, in many ways, to the decline in unionization. A study by economists Florence Jaumotte and Carolina Osorio Buitron found strong evidence linking the rise of income inequality with the decline in unionized workers. Basically, less unionized workers results in the reduction of bargaining powers which has a negative effect for middle and low-income earners but an increase for corporate managers and shareholder returns.
The reports states, "Historically unions have played an important role in the introduction of fundamental social and labour rights. Conversely, the weakening of unions can lead to less redistribution and higher net income inequality."
From a Canadian perspective, a new report from the Canadian Centre for Policy Alternatives has found unionization drastically affects a persons' ability to improve their financial position as well as their ability to withstand periods of economic recession.
"The findings suggest that there is a huge opportunity cost for workers who lose a unionized position, especially during recessionary periods," said economist Hugh Mackenzie, who co-authored the study with statistician Richard Shillington.
"Conversely, workers represented by a union tend to move a notch or two up the income ladder. They’re not only better positioned to weather economic storms—they’re more likely to experience the Canadian middle class dream: upward income mobility."
In New Brunswick, the provincial government has spoken of increased privatization and job losses in the public sector. This will no doubt have an impact on unionized workers. Various newspapers have advocated for large job cuts within the public sector with little or no thought as to how services will be impacted.
Successive provincial governments have tried to cut their way to prosperity. In short, those methods have failed with increased deficits and unbalanced budgets the norm in the province.
It's time for our leaders to be reflective and look at what has helped drive prosperity in the past. If we want a strong economy, we need a strong middle class. A strong middle class was forged, thanks in large part, to the gains made from the labour movement.
Strong unions results in a strong middle class and a strong economy for all.